December 18, 2007 | By Fred von Lohmann

Does Peace with UMG Mean Downgrade for XM Subscribers?

XM and Universal Music Group (UMG) have apparently settled their lawsuit over XM's Inno (we explained the details in a May 2006 post when the suit was filed), the little receiver/recorder that promised to be like a TiVo for your satellite radio subscription. Early reports only speculate about the terms of the settlement, suggesting that XM is probably paying a royalty to UMG for every Inno sold.

That's bad enough, as it sets a precedent that record labels can effectively tax innovators for building new technologies (UMG also pressured Microsoft into paying a royalty on every Zune). But the real question is whether XM will "downgrade" the features that the record labels object to -- like the Inno's ability to record only artists you specify and randomly access individual tracks (the record labels complain that this makes the Inno too much like an iPod, and that copyright law is somehow responsible for policing the boundaries between iPods and radios and computers and ... and...). Many will recall that the RIAA has been pushing for new laws like the PERFORM Act and FCC regulations that would prohibit these features, leaving us in a world where digital audio recorders are artificially left less capable than even the original TiVo video recorders.

So, any of you who own an XM Inno, please let us know if you get a mandatory "upgrade" that downgrades your device.

UPDATE: a helpful Inno owner tells us: "The firmware on the Inno apparently can only be changed via a USB cable using special software on your PC. They've gone through several versions including the famous 1.05 where the illegally high powered FM modulator could be enabled at any time. Later versions turned off this feature, but many people still cling to their 1.05 version Innos in spite of the bugs." So it appears that Inno owners may be protected from mandatory "downgrades," but at the expense of not getting other new features.

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